Thanks in advance
I was mailed a check on December 31, I only received it today, January
5, 2011 It will be under 1099 If I cache it now - is it considered 2010 income or 2011? is there any IRS web link for that? Thanks again
Cash-basis accounting: 2011 Accrual-basis accounting: 2010
What is the date on the check???? That is what counts, not when you receive or cash it, as far as I know.
Sorry, but that's just wrong. For a cash basis taxpayer, income is taxed in the year received, even if it was sent and deducted by the payer in a different year.
This must be the time of year for constructive receipt questions. The situation you raise has been asked and answered and litigated numerous times. I have come to rely upon PPCs Guide to Employee Compensation that goes into constructive receipt of employee compensation. As it is copyrighted, I will apply it to your situation.
If the employer (I am aware this is a 1099 situation.) made the check or cash available to you by 12/31/10 (i.e., you could have had the check in your hands on 12/31 or you could have had the funds direct deposited), then you have constructive receipt in 2010. If on the other hand, the employer practice is to mail checks, then a check posted on 12/31 is not
2010 income.
Unless it was delayed at the option of the taxpayer (constructive receipt). E.g. a paycheck was available to you December 31, but you took vacation that day, and didn't receive it until January 3.
Seth
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